Dr. Reddy’s Laboratories will acquire a portfolio of eight Abbreviated New Drug Applications (ANDAs) in the U.S. for $350 million in cash from Teva Pharmaceutical Industries and an affiliate of Allergan. According to a press release, the portfolio consists of products that are being divested by Teva as a precondition to its closing of the acquisition of Allergan’s generics business. The acquisition of these ANDAs is also contingent on the closing of the Teva/Allergan generics transaction and approval by the U.S. Federal Trade Commission of Dr. Reddy’s as a buyer.
India's Dr Reddy's in $350 million deal to buy eight U.S. drugs from Teva, Allergan
India's second-largest drugmaker Dr Reddy's Laboratories Ltd said it agreed to buy eight generic drugs from Teva Pharmaceutical Industries and Allergan Plc for $350 million in cash to bolster its U.S. business.
The deal is among Dr Reddy's biggest acquisitions, and comes at a time when the company has been facing slowing growth in the United States, its largest market, due to regulatory troubles and fewer new drug approvals. Some formerly lucrative emerging markets have also taken a hit over the past year, and caused the company's March quarter profit to slump 86 percent.
The drugs Dr Reddy's is buying are being divested by Israel-based Teva, the world's largest maker of generic drugs, to win U.S. antitrust clearance for its $40.5 billion acquisition of Allergan's generic drugs portfolio. The sale to Dr Reddy's puts Teva a step closer to closing the Allergan deal.
The deal consists of generic drugs awaiting U.S. approval, and some that are already on the market, including "complex generic products across diverse dosage forms", Dr Reddy's said in a statement. The branded versions of drugs under the deal had U.S. sales of about $3.5 billion in the year to April 2016, the company said, citing healthcare research firm IMS Health.
Dr Reddy's said it plans to finance the deal with cash on hand and available borrowings under existing credit facilities. The acquisition is contingent on closing of the Teva-Allergan deal and approval of the U.S. Federal Trade Commission, the country's antitrust regulator.
Reuters reported last month that Teva was finalizing up to $2 billion in asset sale agreements to win antitrust clearance for its purchase of the Allergan products. The products being divested include those to treat illnesses ranging from cancer to respiratory disease and central nervous system disorders.
The portfolio is a mix of filed ANDAs pending approval and an approved ANDA, comprised of complex generic products across diverse dosage forms. The combined sales of the branded versions of the products in the U.S. is approximately $3.5 billion MAT for the most recent twelve months ending in April 2016 according to IMS Health*.
G.V. Prasad, Co-Chairman and CEO of Dr. Reddy’s Laboratories, said, “This transaction will add strength to our product portfolio, help us be more relevant in our U.S. market and also create new opportunities for growth.”
Alok Sonig, executive vice president and Head of North America added, “Dr. Reddy’s Laboratories has a strong track record in the U.S. market with over 79 filed ANDAs pending approval, of which we believe 18 have first-to-file status. The acquisition of these attractive ANDAs from Teva will enhance our short-to-midterm aspirations and is consistent with our growth initiatives to identify inorganic opportunities to expand our base business.”